LeBron and the RNC

Cleveland has been all over the media lately, and not just for flaming river jokes.  We managed to land both the 2016 Republican National Convention and LeBron in the same week.  Unless "King James" is a secret Reaganite, these are obviously separate news items.  But is there a common theme?

There is, and it is that the Republicans have something to learn from LeBron's return.

Depending on how you look at it, the crowds are either forgiving or fickle.  A few years ago, LeBron was seen as the Judas of Cleveland, forsaking his allegiances for the chance at a ring or two.  Heck, just a few weeks ago, much of the town was rooting for the San Antonio Spurs, just to see LeBron's Heat lose.

With his announcement to return, LeBron was given instant prodigal son treatment by the same fans who had sworn eternal anger at him.

Republicans, are you watching?

The rush to embrace LeBron shows how easily swayed the masses can be.  Yes, the GOP has struggled for decades in Cleveland, but there was a time that this was a good Republican town.  Can the GOP Convention be "The Return" for Republicans?  Can it peel away the horrible reputation that Democrats have painted on the GOP in Cleveland?

In all honesty, the GOP convention in Cleveland will be lucky to turn enough hearts for it to be worth it.  But considering the wildly passionate embrace the once hated LeBron received, it's always good to remember how quickly popular opinion can sway.

RNC Cleveland.

It's official...the 2016 Republican National Convention is coming to Cleveland.

I recently wrote about this with some skepticism.  Really, I was hoping it was just a ploy by the GOP to rally at least a little support in our dear swing state.

But the Republican Committee went ahead and did it.

This move is likely a symbol of the 2016 elections as a whole.  Either the Republican Party has learned nothing in its eight years of defeat (2010 excluded), or there is something so brilliant going on that we don't even know it's brilliant.  I mean, Cleveland?  Really?  This is a staunchly Democrat town in the heart of the Rust Belt.  It is the opposite of "cool."  I can say from experience that Beltway types often gasp when hearing of a bright young professional who chooses to stay in the Midwest.

But it is a swing state, both politically and economically.  Maybe the GOP sees that its only chance of winning is engaging those far away from the eastern seaboard.

I'm still pretty skeptical, though.  It's not called the "Stupid Party" for nothing.

What Matters Most in Life?

You might notice that I post a lot of Prager University videos on here.  They are not lacking for content and aesthetics.



This week, Dennis discusses what is most important in life:  good values.  It is somewhat ironic that he presents this in a value-free fashion.  That is to say, he assumes that anyone with good values would not cheat.  Is this realistic?   Some people value getting into a good school over honesty.  So Dennis is not just advocating values, he is advocating a certain set of values -- that is, the Judeo-Christian values.  This is, after all, the value set which has done the most good for mankind.  I'm not sure if this was intentional to avoid setting off secular viewers, because Dennis is usually not afraid to bring God into his arguments.  But speaking of "values" without a context does not do much in the way of "life studies."

The Costs of Brazil vs Colombia: Protest and Poverty at Brazil's World C...

An important look at the "unseen" impact of publicly funded professional sports.



I don't know too much about the examples of China and Brazil that the video brings up, but no one should be surprised.  I can comment a little on America's questionable government/sports relationship.



Eminent domain claims have not been used in America (yet), but we've come close enough.  Cleveland levies a "sin tax" that goes to fund pro sports infrastructure.  These facilities get massive tax breaks and subsidies to occupy prime real estate, where some of them are used only a few times a year.



People are crazy about their sports, but it's time to stop offering unconditional love and look at the crony capitalism behind a lot of these stadium projects.

4th of July Declaration

Mississippi -- Another reason to repeal

This is starting to cycle out of the news, but I wanted to spill a few pixels over Mississippi's election.

Dirty secrets are still surfacing, but it looks like the Republican establishment really outdid itself this time.  I try to avoid cliches, but "with friends like this, you don't need enemies."

I might be naive, but it seems like politics has been getting dirtier the past few years.  This seems especially apparent at the state and local level, where the margins are usually smaller and just a few votes can tip the balance.  Al Franken's election comes to mind.  How to avoid some of this behavoir?

Repeal the 17th!

We've discussed this earlier, but the 17th Amendment allowed for the direct election of senators.  This gave greater control to the state government and served as a moderating force to the whims of the people.
It also helped avoid voter fraud.  It is much easier to re-count the votes of 100 or so state legislators than thousands of private citizens, some of whom may not even have identification cards.  The reality of voter fraud was all the more apparent in the Mississippi election, where Democrats were openly voting in the Republican primary, and little effort was made to check their eligibility.

It was likely not a determining factor, but the avoidance of voter fraud is one of the best consequences of an indirect election process.  We should go back to this system instead of facing another questionable election such as in Mississippi.

Ann Coulter on Soccer

Hysteria from pundits of all political stripes has ensued from Ann Coulter's column criticizing soccer in America.  Conservatives and liberals both have claimed this as a sign that Tea Party types are out of touch and conspiratorial.

Let me defend Ann to my vast reading audience.

This column is another classic Coulter style of mixing satire with serious thought.  Too bad she didn't really supply any statistics, but one has to wonder how much demography really does have to do with interest in the World Cup.

For instance, I was in Canada a couple of weeks ago.  Half of the citizens of Toronto were born outside Canada.  There was a much greater zeal for the World Cup in Canada than in America.  It's just more popular overseas.

Is that necessarily a character defect? Maybe not.  I am very critical of the mob-like escapism that professional sports provides, but I don't see how following soccer is any different than American football or hockey.  I will posit that the shift in popularity from baseball to football is likely a symptom of our growing attention deficit.

Regardless of the reasons that soccer may be growing in popularity, the liberal backlash against this column is disgusting.  Coulter does not seek legislation to ban soccer.  She does not use inappropriate language to criticize them.  She doesn't even compare anyone to Hitler!

When schools are banning cupcakes at birthday parties, the wrath over this column is really misplaced.

RNC Cleveland?

Cleveland has made it to the final round in the 2016 GOP Convention.
As usual, the Republican National Committee has given us options that make no sense.

The two finalist cities couldn't be further apart.  Dallas is booming, conservative and Southern.  Cleveland is stagnating, liberal and Northeastern Rust Belt.  This is not a conservative-friendly town.

While I appreciate the GOP is making a better attempt to influence the swing state of Ohio, this would have been much better accomplished with a Cincinnati or Columbus bit.  The infrastructure, economy and conservative base of these cities are much more realistic for a GOP Convention.

Mergers

With the economy stagnant and companies sitting on ever-increasing piles of cash, mergers and acquisitions are building to pre-recession levels.  This story goes into the corporate psychology that would compel executives to do this.

But the average investor, employee, and customer should not follow along.

In an economy where a simple handheld app can upend industries to the point where worldwide strikes ensue (a la Uber), what is the benefit of assembling a bureaucratic organization?  The information-driven economy has never been better for smaller start-ups and entrepreneurs to take on new markets quickly, without needing vast infrastructure.

Large conglomerates worked when the economy was based on lowering the marginal cost of producing widgets.  Now that the marginal cost of sharing information is essentially zero, this strategy is not going to work.

All data subject to change

My posts have been less frequent these days.  There's been a lot going on at work and otherwise lately.

Rather than my usual news-item commentary, I am going to write about something I've learned from data modelling and visualization.

The biggest expense for many employers is salaries & wages.  This can be a tricky expense to model and visualize, because there is a lot of seasonality in the way payroll expenses are paid.  I will give one example of a visualization that looked great until June or so -- then started failing.

Why?  

My graphs were focused on showing the trend of different pay types (overtime, maternity leave, etc.) month-over-month.  What special kind of payroll would peak in summer?  Vacation!

A full year of data would have showed that vacation time dwarfs most other pay types.  The comparisons were much harder to see with this huge gap drowning out the scale.  I needed to consider a better visualization to account for the abnormal build in vacation time versus other pay types.

Moral of the story?  Think about where your data is going.  Think about seasonality and what might come next before you get too confident in your visualization.  Do a lot of backtesting, or fitting old data into your model or visualization.

McCarthy's election

Unsurprisingly, Kevin McCarthy has been named House majority leader.

While I am somewhat disappointed in this decision, I am proud that some level of indirect representation still exists in this country.  One of my college professors at Hillsdale proudly sported the bumper sticker, "Repeal the 17th!"  For those of you who didn't go to Hillsdale, this is the amendment allowing the direct election of senators.

The Senate was loosely based of Britain's House of Lords, which back then was largely seated with inherited delegates.  Our Senators were sent by state legislators.  This was meant to restrain the whims of the voting populace from sending radical candidates to the Senate.  The electoral college method of choosing a president was also meant to lend temperance to the process.

Today, Senators are elected directly, and there is a huge push to abolish the electoral college.  The House was designed to be the federal body most engaged with the people, but there are still some indirectly appointed positions.  At least the voting of the Speaker, Majority Leader, etc., are still handled by the legislature itself.  I did not feel any less engaged than had I voted myself.  With so many other ways to make one's voice heard, voting is not the sole means of political expression anymore.  

Pelletier goes home

Here's some good news  for a change.

Justina Pelletier has been allowed to return home after a battle with Boston Children's which should give anyone concern about this venerable institution.

Belly up to the student loan bubble

The cumulative outstanding balance on federal direct student loans has jumped 517.4 percent under Obama's watch.

With easy credit and fewer jobs available, students are piling onto debt like fried chicken at a Golden Corral.  The aftermath of such behavior is never good.  To make matters worse, student loan burdens are being made less strenuous for those who choose "public sector" jobs.  All-you-can-eat benefits.

Can the taxpayer even afford enough Tums to justify this behavior?  

Hoover and the Great Depression

The parallels between the Great Depression and our Great Recession are uncanny.



A Democrat comes into office on the heels of a milquetoast Republican, blaming the economy on a free-market straw man while in reality continuing on the same economic policies.



I always wondered how on earth an economic downturn could have lasted 10 whole years.  That's eons in the business world!  In the Bush-Obama period, I'm starting to see how it is possible.



Here's to hoping that this economic malaise won't be overshadowed by a major war....

Father's Day

In honor of Father's Day, here is a post from Dennis Prager, explaining the commandment to honor our mother and father.

Happy Father's Day to all those men living and departed who serve as role models for us to live the Judeo-Christian values.

Entrepreneurs vs. thugs

These remarks from Thom Hartmann are truly idiotic.

You "don't have to deal" with the Koch Brothers?  Are you kidding me?  So men that made their fortune the old-fashioned way and are contributing to advance liberty and cure cancer are favorable to a cabal of thugs?

I'll take even the slickest of shysters on the free market over a shyster with the power to seize my property.

UberCab Demo

Uber is all over the news, including this blog.  It's exciting.

Below is a demonstration from this app on how Uber actually works.

10 years behind the conservatives?

It's often said that American policy is basically just Europe's, but 10 years behind.  This implied that progressive ideas made their way here, they just faced a little more resistance.

It starts to seem like America is again behind the times -- but this time it's because we are slow to embrace conservative policies.  Just as Britain hits the brink of an immigration crisis and Canada relaxes its energy policies, Obama has us going straight to these same tired policies.

We can only hope that this is our future.  And with an economics professor handily defeating a tired old Republican, maybe we will get there.

Steps of Pittsburgh

We at this blog are fans of all things Rust Belt.  The WSJ had a great human interest story on the stairs of Pittsburgh.

Like most Midwestern cities, Pittsburgh's industrial days have left behind an expensive infrastructure.  In this case, many stairs were constructed to accommodate immigrant working-class housing.  The city can barely chart all these staircases, let alone maintain them.

It would be a shame for the city to just destruct these.  How about privatizing them?  Like the article says, many of these stairs lead to residences that cannot easily be found from the street.  Private companies would do a much better job cataloging their own property.

In a city that is leading the Rust Belt's recovery, this urban, pedestrian-friendly feature of the city should be capitalized on.  Privatization of the city's stairs would be a great way to explode the myth that infrastructure can only be maintained by the government.

Perverse Incentives U

In a move completely against the principles of economic incentives, President Obama used that famous pen to sign an executive order which would cap student loan payment to 10% of a student's monthly income.

Really?

As a hardworking recent graduate who (along with my parents) has made a lot of sacrifices to pay off my student loans the old-fashioned way, I am honestly too exasperated to elaborate.  So take it away, Peter Schiff.

This is going to be the student loan bubble's equivalent of the Community Reinvestment Act.

#Perverseincentives

Uber's valuation

The citizen-for-hire taxi service Uber raised $1.2 billion dollars that put it at a $17 billion valuation.

This should remind us that in the connection economy, value is waiting to be unlocked in the simplest of everyday activities.  What used to just be a journal or small 'zine can now easily become a million-dollar blog.  Stars are born overnight for posting rather spartan YouTube videos.

This extends beyond the creative arts.  There's a market now for your passenger seat or a place at your table.

The mundane now has a market.

Central Asia, the next Gulf?

One of the more amusing -- and predictive -- economic indicators is the "skyscraper index."  Rapidly constructed skylines tend to signal a credit bubble.  The best example of this is the Persian Gulf states, where places like Abu Dhabi and Dubai raced one another to get the highest skyscrapers.  The bubble finally burst in the Gulf, and many of the edifices sit unoccupied.

This same race to blow the bubble is on display in Central Asia.

Bloomberg is reporting on Azerbaijan's new fortunes as an oil country. What caught my attention the most is the story of Tajikistan's one-upsmanship in building a bigger flagpole than Azerbaijan.  This isn't quite the destructive use of capital as a 100-story skyscraper, but it's in the same spirit.

With Russia looking to control the flow of oil into Europe, oil-rich places in Central Asia like Azerbaijan will benefit.  But without a change in the underlying institutions or attitudes toward capitalism, this will be a fleeting moment.  Eventually, the inflow of interest payments will not be able to get repaid, and that flagpole may not be such a symbol of pride.

#DDay70

There have been a lot of anniversaries lately, namely Reagan’s death and D-Day.  Along with commemorating the event, these anniversaries have showed us how much the world’s technology has changed.  Even ten years ago, there was no Twitter when Reagan passed.  It makes the D-Day assaults almost impossible to fathom.  How was the largest military operation in history accomplished without the Internet?  Think of all the calculations and communications that had to be coordinated for the storming of Normandy. 

While there was no Microsoft Office in the 1940s, there were great leaders.  We can have all the technology at our disposal, but without the right man at the helm, they become idle Tweets. 

Think of Reagan 30 years ago (even then, no Internet) and Obama today.  Even with all of today’s technological advances, is Obama a better commander-in-chief? 

Recycle Smarter than a Third Grader! | Learn Liberty

PERC ought to be much better-known.  Unlike most think-tanks, they are not located in DC.  This is greatly to their credit.  It baffles me to think that a think tank advocating a lesser federal government would locate their offices in the federal capital!  I thought DC was supposed to be a seasonal city?



Anyway, PERC tears down the false dichotomy between environmentalism and market economics.  Just think markets when you're recycling!

Prager's Commencement Address

Dennis Prager hits another home run in this Prager U video.  

The wisest point of them all I believe was his first.  This summarizes the liberal versus conservative viewpoint so well.  Is man's primary conflict man vs. society or man vs. himself?  This is a driving theme of Western philosophy and literature.  Thanks to people like Marx and Rousseau, most graduates believe that society is the cause of all their problems.  They do not wish to look inward for flaws.

Although I have some problems with Gandhi, one of the wisest quotes of the twentieth century is certainly: "Be the change you wish to see in the world."

Big Data and disperse knowledge

Economists are frequently turning to Twitter, Google and other online data sources to analyze the markets.

In an economy less focused on manufacturing and more on information and connections, it only makes sense to use internet-created data in economic modelling.  Just as car sales were tantamount to analyzing the Rust Belt economy of the past, Google and Twitter are means of generating value in the information economy.
 
What’s really exciting about these changes is the possibility of exploring disperse data.  In the past, industrial surveys focused mostly on managers and their plants.  How many people did you hire?  What is your inventory?  If the individual was surveyed, it was only among a set list of questions.  Then it would take a few weeks to compile this data among classical statistical assumptions (You need the right sample size…and what is your margin of error?)

No more waiting weeks for top-down approaches.  Now anyone can log onto the web real-time and research what individuals share.  What a great way to gather disperse information and develop trends. 

 

Piketty on CNBC

And he's got the accent to boot!

Thomas Piketty was on CNBC to talk economics.  From the video, he doesn't seem to understand the duelling forces of liberty and equality. 

But when it comes to the Fed, we can all conclude that the Federal Reserve *does* promote inequality.  Credit expansion does not spread evenly to the economy.  It tends to concentrate among those who are already the most protected -- bankers and other establishment types.  The Fed's credit creation has been a bad deal for the rest of us.  I'm glad Piketty got something right!

The Bubble in Higher Education

It's always frustrating when an article delves into an interesting point and a decent conclusion, but gets there through incorrect thinking.

This MarketWatch story is a perfect example.  The author insists that college just *has* to get cheaper.  It's inevitable!  At a certain point, things well level out.  He concludes that for people who would be in college in 20 years (.i.e. those being born today), college will be affordable.

The author doesn't go into the mechanics of why the rising cost of college won't last forever.  It's a classic bubble.  The government has incentivized loads of young people to take on piles of debt in exchange for a college degree.  Once creditors have a hard enough time getting their money back on these poor loans, they will have to stop lending.  Unfortunately, this lender is mainly the federal government.  Government's overbearing role in the higher education system has led to some serious overinvestment in education, and at some point this will be corrected.

It's not that there is just some mystical economic law that predicts all overbuying must end.  In this case, we have a bubble.

James Altucher on College

Glenn Beck sits with James Altucher to talk college.

We've discussed whether college is worth it for most people.  I always want to pull out my "Hillsdale exemption" card at these discussions, but we should be honest that the vast majority of colleges offer very little quality education for loads of debt.

I like that James argues against college not just for the upfront cost, but for the opportunity cost as well.  What could you have done in four years?  A lot of great things that won't put you in debt.

I still think that college is for some people, but all generalizations are general.  And at this point, we should be comfortable saying that a lot of people are in college who shouldn't be there.  I am glad that people like James and Glenn have the courage to bring this up.

Bad food = more eating?

One of the most counter-intuitive lessons I remember from economics classes is how forcing people to smoke light cigarettes may actually increase smoking.

What happens is when you change the constraints on someone without changing their preferences, you are going to lead to a different outcome, and it will likely be something different than you intended.

The same goes for food.  This article makes some good points about French vs. North American attitudes about food.  I tend to ignore Francophilia, but the author has a point.  The French aren't afraid of butter!  No fat-free yogurts for them.  But since they are getting wholesome food, they do not overindulge.  You could make the argument that the French have all kinds of food regulations, but to my knowledge they are not for dietary reasons but instead for cultural of economic.  I am talking regulation intended to make people healthier.

Policies to change peoples' eating habits often does not meet its intended goal.

Is Michelle Obama listening?

Shlaes on the Graphic Novel

We covered this yesterday, but Amity Shlaes is all over promoting her illustrated edition of The Forgotten Man.  What makes this promotion unusual is that she is not only marketing her book but defending its medium as a whole.

Shaes argues that conservatives are failing to capitalize on the popular graphic novel genre.  These books are especially popular with young people and are increasingly acceptable literary sources at schools.  Shlaes believes that conservatives have turned up their noses too quickly at this trend.

Are conservatives really being too hard on graphic novels?   Yes and no.  Illustrated editions of the classics are nothing new and are great introductions to the real thing.  I can remember illustrated versions of various classics as a child.  The Inferno, The Hobbit, and Alice in Wonderland had all been rendered with beautiful drawings by artists of all eras and styles.

The difference between these illustrated editions and the graphic novel is that in illustrated editions, the text was still the crux of the work.  Illustrated versions meant exactly that – it was the same piece of literature, but with pictures.  This is very helpful for children, who may need help comprehending the difficult prose of Shakespeare or Dante.   The goal was never to supersede the book itself.

 Graphic novels, on the other hand, take the basic plot of a book, but reduce it to comic-strip format.  This is a sweeping generalization, but from what I have seen, the graphic novel does not match a regular piece of prose in its depth and vocabulary.  An easy comparison: a movie is hardly ever as detailed or thought-provoking as the book from which is was based.

While I commend Shlaes for her new book, I’m not sure her rallying cry for the graphic novel is necessary.  Shifting the political discourse to what will always be a reduction of the original is not how to change minds.

Internet pennies

I enjoy listening to NPR's Planet Money.  They make economic theory manageable to the average listener, through stories on everything from violins to professional sports.

I'm frequently disappointed, however, in the incomplete economic thought that goes into the show.  The reporters tend to miss some pretty simple connections from their story to economic principles.  It makes the story feel more like a human interest piece rather than applied economics

The recent show on the value of a penny is a great example.  This would have made a great exhibit of how the internet has lowered transaction costs.

The reporters went all over Manhattan to see if they could buy anything for a penny.  The closest they found was at a dressmaker. The shopkeeper told them that a single sequin would cost about one penny, but she would not bother selling it too them.  She said it wouldn't be worth the time to transact the deal.  This is, quite literally, a transaction cost.  Other shopkeepers said that in similar instances, it was actually more cost-effective to give away penny merchandise than to actually sell it.  The transaction costs outweighed the sale.

Flash forward in the show to the internet startup looking to disburse micro-donations to various content providers, and the problem of transaction costs disappears.  The internet has unlocked value potential to the smallest fraction of a dollar by bringing transaction costs basically to zero.  So the internet equivalent of a sequin -- let's say a video or blog post -- can be traded for a penny, with economic benefit.  With the millions of customers surfing the web, this could be a real moneymaker for many online content providers.

Unfortunately, Planet Money failed to develop this idea, and the value of a penny in the online world vs. brick-and-mortar remained more an oddity than an explainable phenomenon. The application of transaction cost theory would have made for such a more stimulating show.

May 29, 1453

Today the Roman Empire fell.

I am happy to see the fall of Constantinople got some modest coverage in the conservative blogosphere.  People are starting to see the Byzantine Empire as not some esoteric force from long ago but the very continuation of the same Roman Empire from which we derive much of our civilization.

Forgotten Man -- Graphic Novel

What better way to give a portrait of the "Forgotten Man" of the Great Depression than by literally drawing him in a graphic novel?

Amity Shlaes recently came out with this sequel to her classic The Forgotten Man.  I heard her on Peter Schiff this morning.  I'm looking forward to reading a comic book!

Student Health Plans going to Medicaid?

Kaiser Health News is reporting that schools are beginning to experiment rolling their student health plans into Medicaid.

Funny how this same class of "young invincibles" that are necessary for the ACA to work are being given every possible incentive not to buy their own health insurance.  First, it was the extension of staying on parents' health plans.  Now, colleges are signing students up for Medicaid.

It would also be interesting to see how HHS accounts for these "new" health plans.  Even individuals that previously were on plans but then lost coverage due to the ACA are counted as "new" when they get an exchange-approved or Medicaid plan.

Nate Silver on Piketty

More mandatory Piketty coverage:

Nate Silver weighs in on "Spreadsheet-gate" with a surprisingly balanced take.  I had always assumed Silver to be a left-leaning ideologue, but he provides thoughtful analysis here on the use of data in the social sciences. 

While I understand the unreliable nature of economic data, it is still hard to absolve doctorate-level economists of making pretty simple spreadsheet errors.  Malign it all you like, but good spreadsheet skills require as much methodology as the data gathering itself.   Piketty's hard-coding would have been shot down pretty quickly in most workplace settings.

More non work related activity

It is good to see that the NY Times has something to say about Cleveland other than its economic depression.  This weekend featured a review on The Cleveland Orchestra's performance of  Janacek's"The Cunning Little Vixen."

Memorial Day

This will be a short call to action of a post, as it is Memorial Day Weekend.  Please consider going out to the various parish festivals that kick of the summer this holiday weekend.  In the Cleveland area, this is the Tremont Greek Festival.  But all across America, similar festivals are happening.  Here is a piece about the New Orleans Greek festival, highlighting the unique mix of Cajun and Greek cultures that has shaped the Holy Trinity Greek Orthodox community.

And before tucking into that delicious lamb shank or gyro, stop and reflect on all those who have perished in defense of our country.  It is almost guaranteed that someone from that church also remembers a fallen soldier who used to be in the pews with them every Sunday.

Is it okay to criticize business practices?

This is a topic that people on both sides of the political spectrum often get wrong.

Amazon's tactics are getting the company into trouble with some in the publishing world.  The author accuses Amazon of a bait-and-switch with the literary industry, where Amazon lured authors and publishers into their nest, only to constrict them into a slow and painful death.

Many on the left would take this kind of journalism as a call to government intervention.  There is a long history of this kind of activism.  From Upton Sinclair's The Jungle to Ralph Nader's Unsafe at Any Speed, writers' exposés have been followed up with regulation many times.

And some on the right would insist that if people didn't like what Amazon is doing, then they don't have to buy it.  Nobody is forcing the publishers to cut these deals.  If it's not mutually beneficial for everyone involved, there wouldn't be a market for it.  Therefore, just be quiet and let business go as usual.  It's not your business to criticize the dealings of others.

I am far more inclined to the second line of argument.  But, I don't see why it contradicts step one of the first point.  We have freedom of speech.  If someone is concerned about a website's business practices, is it not fair to express those opinions?  After learning more, some customers might also be concerned with the future of books if Amazon grows too powerful.  Some of those customers might even try to build a business to compete with Amazon on a platform that is more fair to publishers.  The "creative destruction" of capitalism takes effect, and Amazon grows weaker.  Obviously with the distinction between free speech and slander, free market advocates should not decry every publisher's criticism of a company.  These can be without also inviting further government intrusion in the private sector.

Piketty Math

The media is developing some stories that Thomas Piketty got the math wrong in his now-infamous Capital in the Twenty-First Century.  We've seen this before.  A year or so ago, the models in Reinhart and Rogoff's This Time is Different were revealed to have some errors in calculation.   

A couple of points here.

First, unlike the natural sciences, economics is not inherently quantitative.  Economics is a study of human action, and there are no static laws of how humans will behave.  While quantitative methods can reveal insights into human behavior and economic trends, it will never be able to predict with total accuracy any economic theory.

Secondly, and probably more important for Piketty, is that the numbers don't matter.  Piketty is motivated by his ends, and the models are just supporting evidence.  Tom Woods had a great program with Bob Murphy the other day, picking apart the tenets of Piketty's book.  The most damning to me was that Piketty more or less admits that his calls to action are driven less by economic outcome than an egalitarian sense of "fairness."  

I remember reading in Mises' Human Action that if we look at the ends to which we are addressing our economic theory, most people are generally on the same page.  Everyone wants freedom, a high standard of living, etc.  This may have been the case in Mises's time, but it is hard to say whether that is true now.  Dennis Prager develops this idea a bit further.  It relates as much to Piketty as his own examples.

"Be That Way!"

This will be a short post because it's Friday and I'm exhausted, but I don't want to fall into a bad habit and not update!

Burger King will be changing its motto from the product-oriented "Have it Your Way" to a more lifestyle-focused "Be Your Way."  The impossibility of this platitude notwithstanding, I just don't care for it.  "Be" is such a passive-aggressive verb that it is hard to tell whether BK is inviting or challenging you.  All I can think of is the exclamation, "Fine!  BE that way!"  It also conjures up the expression "Be on your way,"  which could make sense for a fast-food chain, but also invites you to pass up the restaurant altogether.

Just when BK seemed to be launching some unique strategies it had to go and do this.  Branding fail.

Windows Hate

This was probably supposed to be some grand political-economic grandstand, but it almost sounds like a story from The Onion.  MarketWatch reports that China has banned Windows 8 from all government computers.

If they really wanted to shock America, they should have banned the iPad or Instagram or something that people actually like.  This may have been in retribution for some kind of cyber espionage race, but obviously it wasn't signalled in a way that people took seriously.

In fact, it kind of sounds like a good idea....  Windows 8 was not designed with the Chinese government worker in mind, I would imagine.

Is Leisure vs. Labor Irrelevant?

This New Yorker piece brings up a worthy dilemma of our age.  The focus of this story is on Keynes's prediction that future generations will have so much idle time that it may even be bad for society.  Anyone who works even the most flexible of full-time jobs has to be laughing.   The story brings up some ideas on how Keynes could have been so wrong.  Here is my theory.

Keynes postulated that as more capital was accumulated, this capital would be substituted for labor, and in turn, people could use that time that would be spent on labor for leisure.  While useful for modelling purposes, it is against the facts of life to split leisure and labor, especially in a post-industrial age.  This trade-off worked pretty well when a worker's options were either to be on the assembly line making widgets, or back at home where work was inaccessible.  The digital age has made this distinction obsolete.  While working from home is a possibility, is calling in to a conference while shopping online leisure or labor time?

Our standard of living greatly surpasses previous generations, but one consequence has been the loss of a work-leisure distinction.  Keynes lived right at the tail-end of this revolution, and still thought of a clear trade-off between the two.  Unfortunately, anyone who works in the 24-hour e-mail cycle knows that mixing "business with pleasure" in this way leans incomparably toward business.

Prager University

Great work again by Prager University.  If you've ever wondered why colleges are approaching 60/40 female, here's a big reason.

I would add another prescription to ending the assault on boys in the classroom:  classical education.  Greek mythology and Caesar's Gallic Wars captured the imagination -- and the attention -- of boys for centuries.  This makes a more convincing argument than Ms Summer's idea to let boys draw monsters and skateboarders.  

Consolidation in Health Care

Health Affairs has a post today about the effects of health care consolidation.  We at our nascent blog have also begun to explore the effects of this trend.  With individual providers joining hospitals and even whole health care systems being acquired by their larger competitors, the consolidation of care is one of the ACA's strategies.  The logic is that if one provider can see through a patient's health, focusing on preventive care and lowering costs rather than charging more and more for perhaps unneeded procedures, the cost of care will increase.

I am skeptical about this proposition, and it sounds like the jury is still out in general.  Specialization is the fruit of an advanced economy.  Why limit that in health care?

Jobs they won't take?

This WP piece highlights another interesting debate in the college vs. manufacturing job debate (also discussed here yesterday).  The conventional wisdom is that there are all these manufacturing jobs available, but young people refuse to take them.  They find them too dirty and dead-end.  This is the much-cited "wage gap."  

This reminds me of a proud homeowner who refuses to budge on an asking price even though the house has been sitting vacant for months.  The market is demanding one thing, and her opinions another.  At some point, she will have to give into the market demand.

I will not doubt that given the choice between a cubicle job and a welding job, most Millenials (myself included) will choose cubicle.  In an era where increasing numbers of youth are raised in suburbia and have never farmed, fixed a car, cleaned a gun, etc., we lack the intuitive knowledge of the trades.  With that, we lack knowledge of the joy that working with the hands can bring.  It is simply going to take more convincing -- and training -- to get Millenials to work in the trades.

It is hard, however, to shed too many tears for employers.  Like the article stated, if they really wanted to hire more young people, they would adjust their wages.  I think there is a bit of an entitlement factor among employers, as well.  They want a round peg for a round hole.  In an increasingly specialized economy, this is nearly impossible.  To step into the job on day one needing no training is not feasible.  Employers in all fields can be this picky, though, with the stagnant hiring market.  I couldn't believe the number of assessments, interviews, requests for samples of my work, etc., I had been asked when pursing an entry-level job.

The "skills gap," in conclusion, is a gap caused on both sides.  Young workers don't have the interest in learning the trades, and employers don't have the interest in teaching them.  At some point, if there really is a market demand for these jobs, the gap will close.  But like that proud seller, it could take some time for convincing.

Hard Work U

This WSJ piece offers a compelling compromise to the raging college vs. workforce debate.  While I am convinced there is a bubble in higher education, I think some critics of a college education go too far.  While there is always a need for the trades such as plumbing, carpentry, etc., every industry is undergoing a data revolution.   To be a car mechanic today requires significant computer programming abilities, for example.  Advancing to a management position in the trades still requires some post-high school education.  Whether that has to be from college is debatable.  With so many fine online learning resources, the brick-and-mortar college needs to make a better case for itself.

The College of the Ozarks seems to be doing this.  Each student works his way through school, graduating debt-free.  What a great program.  I worked as an RA through college, and I found this one of the more rewarding parts of my education.  I met people and engaged in activities that would have never happened through my studies.  Employers often asked just as many questions about my college jobs as my actual studies.  I wonder how much of this real-world experience can be replicated for online learning.  While so much less expensive, you do get what you pay for.  For specialized training to those who already have a network, online education is a deal.  But for young people still making their connections and drafting their career plans, there is no substitute for a good college campus.

The debt-free feature of this program is almost unbelievable.  So many young adults are deferring retirement investments, buying a home, etc., because of the crushing student debt.  Leaving college with no debt will open up so many doors to these graduates.

The College of the Ozarks "business model" should get college administrators thinking.  While college is not for everyone, it can still be a good investment for a motivated young person - especially when the cost is nearly free.

Twittering Health Care

Interesting to see this Health Affairs piece discuss the use of social-media analytics in health care.  Medicare released detailed reimbursement information that was synthesized across the Twittersphere.  Some of this work contained serious analytics that gave consumers and health care professionals alike a better feel for the Medicare reimbursement system.  With pressures on Medicare mounting, it is important for hospitals to know what may be their best reimbursement strategies.

Unfortunately, though, it is difficult to see more benefits than simple gamesmanship come from this release of data.  As a large government agency, Medicare does not have the incentives to make the market adjustments.  If some specialties or regions are more expensive than others, patients are not compelled to seek the less costly competition.  The prices will not come to equilibrium.  While Medicare's reimbursements are based on a sophisticated algorithm based on value-neutral analytics, it would be naive to dismiss any political lobbying enters the process.  This New York Times piece shows how the weighting of specialists on Medicare lobbying and advisory boards tends to favor some specialties, such as dermatology, at the expense of others, such as primary care and obstetrics.

While big data, especially in the form of open-source data, is leading to breakthroughs in business, it is hard to see how this will very much impact what is, in the end, a government monopoly.

Working for the Plan

I wanted a post that wasn't about health care, but it's just in the news a lot now...and, it's what I think about every day.  This story didn't even really mention health care, but I believe it was omitted on purpose.

This New York Times story highlights some interesting dilemmas of an aging workforce.  Employers are becoming slower in "putting out to pasture" their older employees.  With longer life expectancy, it only seems reasonable that people would work longer.  But to what extent?  Even with people living longer, it's hard to see an employee as productive at age 65 as one at age 35.  The last 10 years of life at age 75 will just not be as pleasant as the last 10 years at 55.  Chronic ailments are more common; things "break" more often.  While a thirty-year retirement may not be financially sustainable, can we expect 70-year-olds to be putting in 70-hour-weeks?  Hence these transition plans are springing up to gain from the wisdom of older employees while sparing them the 24-hour work cycle that is now the norm.

But I think there is another factor that hasn't been discussed....health benefits.  Medicare is taking huge budget cuts and the cost of care for the elderly is seriously high.  With nowhere else to go, could these older workers be focused on health benefits?  I have heard many older people say that they only stay on their jobs because of the insurance.  With many employers cutting benefits to part-time and seasonal workers, it seems tenuous to expect many benefits from a quasi-retired position.  

I hope the Millennials are taking notes....

Health Care Costs

This recent Fiscal Times article got me thinking about how to apply the lessons of e-commerce to health care.  The article stated at first that individual patient habits were to blame for expensive health care costs, but then goes on to explain that it's really because they can't make up their mind about what health care system they want to use.  Can anyone solve that first problem?  There is the "Nudge" phenomenon of gently compelling consumers to behave in desired ways, but this is a very new field of thought incapable of changing an entire industry at this point.

The second objection -- that customers are "spoiled due to the 'buffet effect'" -- puts the cart before the horse.  Why are customers spoiled?  Isn't freedom of choice a good thing?  Why assume that getting all services from one health care system is more efficient?  These claims assume away basic human behavior.  The author has muted enthusiasm that Accountable Care Organizations (ACOs) can direct patients to less-expensive costs of care.  These cost savings, however, are not borne by the consumer.  At the same time, consumers do not see the true cost of care.  This explains why ACO patients may bounce from one hospital to the next.

In the age of electronic medical records, the transaction costs of receiving care from numerous providers is lower than ever.  This is not the major cause for concern.  The payment structure is.

Big Data at the Hospital

This Wall Street Journal story caught my attention because it is capturing many of the trends in my industry.  The growth of data, cost control, and population health are all featured in this quest to use data science in health care.

The article implies that using data science may bring down some of the walls of specialization that can sometimes create communication backlogs between patients and providers.  Of course specialization creates value.  But as health systems grow into ever more detailed specialties, it becomes difficult to communicate results between areas.  Data can help point out connections between symptoms that are usually handled by other medical specialties.  What previously may have been just a coincidence involving a few isolated patients can now be spotted as a medical trend.  In other words, data can provide information that can scale.

This leads into the new emphasis on population health, which focuses on engaging the community in preventive health and lifestyle measures.  This may keep people away from costly emergency room visits, but we will always have a "tail" of patients with serious problems and hard-to-diagnose problems.  While inferential data statistics can do a lot of good, we should not forget what happened to our financial models during the economic meltdown.  Would we want to apply the same blind reliance on data to our health?